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recommend this option due to its failure to meet the IZO's requirement that 15% of all units be affordable to very low and low income households. Regarding Option 2, the Housing Commission's concerns were related to the lack of affordability resulting from the fact that twenty-three of the forty-six units are reserved for moderate income, not very low and low as set forth in the IZO. As the Council concerns about the legal standing of the City's IZO was anticipated in the Housing Element, it includes a policy (Policy 16.2) that indicates the City's intent to amend the IZO to ensure consistency with the Housing Element's goals and "recent court decisions regarding rental housing." This item is addressed more fully in a separate agenda report on this evening's agenda and provides the City Council with options for addressing the Housing Commission's concern regarding this inconsistency. Notwithstanding these broader affordable housing policy issues, staff has indicated that in view of the current legal environment, both Option 1 and Option 2 would adequately address the intent of the IZO which is to secure rent restricted units for the life of a development. Overall, Option 2 provides a greater number of units and, therefore, it is staffs recommendation and, while Option 1 provides deeper affordability that cannot be minimized, staff is concerned that this will result in future affordable housing proposals that are less than 15% without deep affordability. Notwithstanding this concern, staff would support the selection of Option 1 and, if approved, staff would amend the attached recommended affordable housing agreement to reflect this option. Apart from the differences related to levels of affordability, the recommended affordable housing agreement would have the following terms for either Option 1 or Option 2: • The agreement will be recorded with the land and remain affordable for perpetuity. • Requires the development to accept Section 8 housing vouchers from eligible qualified applicants. • Affordable units will be rented based on the City's adopted preference system. • Payment of the City's Lower Income Housing Fee is not required as the development will meet the goals of the City IZO and Resolution 10-390. • Affordable units would have finishes similar to market units and would be located throughout the development. • Rents would be based on current Area Median Income levels. • One of the Affordable 1-bedroom units, one of the Affordable 2-bedroom units and one of the Affordable 3-bedroom units shall be fully accessible for the physically disabled. Unit design shall include amenities such as grab bars, modified case work and bathroom facilities, and other amenities deemed significant for disabled access. Further details regarding the background of this matter are included in the Housing Commission agenda reports included as Exhibit D of Attachment 9. The recommended Affordable Housing Agreement is included as Attachment 2. Development Agreement The applicants have proposed a development agreement (Attachment 3) to vest the entitlements for the project. The term of the development agreement would expire in 10 Page 8 of 12